Corporate Governance System

Clarion is transitioning to a company with nominating committees etc., to ensure fast and flexible management as well as to strengthen governance, alongside our existing commitment to preserve management transparency and fairness.

Corporate Governance System

With continuous growth and medium- to long-term increases in corporate value in mind, Clarion transitioned from a “company with company auditors” to a “company with nominating committees, etc.,” in June 2016.

As a “company with nominating committees etc.,” our Board of Directors determines management policies, fundamental principles and medium- to long-term strategies and supervises management and execution of business along with their directions. Executive officers, entrusted with majority authority for business management, focus on execution of all duties. This clarifies the division of management supervision and management of the business execution to enable faster, more flexible management.

The Board of Directors, after transitioning to a company with nominating committees etc., will consist of eight members (including four external directors). Three committees, in which external members will have majority, will be established within the Board of Directors. These committees are, a nominating committee, an audit committee, and a compensation committee. These committees nominate directors, oversee directors and executive officers, and decide compensations for directors and executive officers, with full transparency and impartiality.

The Corporate Management Meeting, an advisory body to the president, consists of directors with executive duties, executive officers and corporate officers. It assists the executive president in his or her performance of faster decision-making and appropriate risk-taking with regard to management, under guidance and direction of the Board of Directors per its medium-term management policies.

An Internal Audit department implements regular internal audits in every part of the company and all group companies. Cooperating with the audit committee, they examine business activities to improve efficiency, ensure legality, and check for conformity with internal regulations. The department reports audit results to the representative executive officer, conducts assessments, and issues guidance, as necessary.

Corporate Governance System (as of June 24, 2016)

Addressing Internal Control Structures

Qualitative Improvement of Internal Control

Clarion endeavors to redevelop internal controls as enhancement of corporate governance since 2006.

As the Corporate Law came into effect in fiscal 2006, we have been rebuilding internal control structure across the company and implementing management assessment every year based on “Basic Policies for Internal Control System” laid out upon resolution of Board of Directors. Since Fiscal 2007, as a member of the Hitachi Group, we are rebuilding internal control structure with respect to financial reporting which subjects all domestic and overseas Group companies and are reporting its status assessment to Hitachi, Ltd. Since Fiscal 2008, we implemented internal control and assessment based on the Japanese Financial Instruments Exchange Act (J-SOX Act) as the Group and the reports are made to the Financial Services Agency.

There has been no case of material deficiencies discovered in annual assessments subject to disclosures with respect to internal control regulations. Through prompt corrective actions for deficiencies found during assessments, qualitative improvement of internal control system has been achieved. We continue further to improve management quality of the Group through efforts extending from internal control required by laws and regulations.